Tenant improvement allowance calculator
When you ask for build-out above the landlord’s allowance, they don’t give it away — they amortize it back into your rent. See exactly how much a tenant-improvement package adds to your rate per square foot over the term.
How build-out ends up in your rent
When a tenant needs build-out beyond the landlord’s improvement allowance, the landlord rarely just pays for it — they amortize the extra back into your rent, principal plus interest, over the lease term, exactly like a loan. This calculator shows how much a tenant-improvement package adds to your rate per square foot, which is why negotiating the allowance up directly lowers your rent.
Example. Amortizing $40 per square foot of over-standard build-out across a five-year term at 8% adds about $10 per square foot per year to your rent. On 3,000 square feet, that is roughly $30,000 a year, or $2,500 a month, on top of base rent — a strong reason to push the landlord’s allowance higher before signing.
Frequently asked questions
What TI should you be asking for?
Tell me the size, the use and the condition it's being delivered in. I'll tell you a realistic allowance to ask for and how to structure the work letter so you actually get it.
Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.
An allowance is a loan with the interest hidden in the rent
The most useful thing to understand about a tenant improvement allowance is that it is not free money and it is not a discount. It is capital the landlord advances and recovers from you through the rate, usually with a return attached.
Which means the real question is never "how big is the allowance." It is what you are paying for it, over how long, and whether you would rather have the money or the rate.
Run it. A landlord offers $50 a foot on 5,000 square feet — $250,000 — amortised into the rent over a ten-year term at 8%. That adds roughly $3.64 a foot to your rate every year for a decade, about $36,400 a year, around $364,000 in total. You borrowed $250,000 and repaid $364,000. That may still be the right deal if you cannot fund the work yourself, and it is plainly the wrong one if you can and the alternative is a rate $4 lower.
The calculator above does this arithmetic. What it cannot do is tell you your own cost of capital, which is the input that decides the answer.
Why office tenants should be asking for more than they do
Of the 17,728 office parcels across Broward, Miami-Dade and Palm Beach, 10,887 — 61.4% — were built before 1990, and the median was completed in 1984.
Tri-county commercial parcels with a structure and a recorded year built, August 2026.
A building in its forties is not delivering you a modern suite. It is delivering a space where the ceiling grid, the lighting, the restrooms and frequently the HVAC distribution are all at or past their service life. Work that a tenant in a 2015 building would call a refresh is, in a 1984 building, closer to replacement — and a landlord asking market rent for that space is asking you to fund the difference.
That is the argument for a larger allowance, and it is a stronger one than "other landlords are offering more." It is specific to the building you are standing in, it is verifiable, and it reframes the allowance as the landlord catching their asset up rather than doing you a favour.
What the work letter actually has to settle
Who holds the contract
A landlord-built job means they control cost, schedule and quality, and your leverage is the approval right you negotiated. A tenant-built job with a reimbursed allowance means you control it and carry the overrun. Neither is universally better; what matters is that the document says which, and what happens when the estimate is exceeded.
What the allowance may be spent on
Many work letters restrict it to hard construction, excluding architectural fees, permits, cabling, signage, furniture and moving. Those exclusions can absorb a large share of a real project. Push for the broadest definition you can get, and get any exclusions listed rather than implied.
Unused allowance
If you spend less than the allowance, does the balance go back to the landlord, convert to free rent, or apply against the next year? Silence here defaults in the landlord's favour. Rent credit is the usual compromise and it is worth asking for.
When it is actually paid
Disbursement on completion, with lien waivers and a certificate of occupancy, is normal — and it means you fund the whole job first. If that is a problem, negotiate progress draws before signing rather than discovering the cash-flow gap once the contractor is on site.
What happens if you leave early
Unamortised allowance is frequently repayable on default or early termination. Check whether the balance is calculated straight-line and whether it is claimed on top of other remedies, because that number can be larger than the termination fee itself.
What counts as a fair allowance here
Most tenants come to this calculator with one number — the one the landlord put in front of them — and no way to tell whether it is generous, thin or roughly normal. These are the ranges I see land in South Florida, by asset class and by how much competition the landlord has.
| Class | Situation | Negotiated allowance |
|---|---|---|
| Office | Class A, tight submarket (Brickell, CityPlace) | $25–$50/SF |
| Class A, higher vacancy (suburban Broward, secondary PBC) | $50–$85/SF | |
| Class B suburban | $30–$65/SF | |
| Medical | $60–$100/SF | |
| Retail | Strip centre inline | $15–$40/SF |
| Shopping centre, anchor-adjacent | $35–$60/SF | |
| Restaurant / food use | $60–$120/SF | |
| Industrial | Warehouse / distribution | $10–$25/SF |
| Flex (office portion) | $20–$50/SF |
Read those as outcomes, not as opening offers. The first number a landlord puts on the table is almost always below the bottom of the relevant band, and on a second-generation space it is often the phrase "paint and carpet" rather than a number at all.
The other way to sanity-check an allowance is against your own rent. An allowance worth somewhere between a quarter and one-and-a-half times your first year's base rent is ordinary. Far below that and the landlord is asking you to fund his building. Far above it and you should be reading the amortisation clause very carefully, because you are almost certainly paying the money back.
Why the building's age sets your number more than any national range
Every national guide to tenant improvements gives you a band and stops there. The band that matters is the one attached to the specific building you are standing in, and in South Florida the biggest single driver of that number is how old the building is.
So I pulled it. Across 50,240 commercial parcels in Miami-Dade, Broward and Palm Beach counties, here is the median year built and the share of the stock that predates 1990:
| County | Retail | Office | Industrial |
|---|---|---|---|
| Miami-Dade | 1965 (73% pre-1990) | 1984 (62%) | 1985 (59%) |
| Broward | 1972 (77% pre-1990) | 1981 (68%) | 1982 (67%) |
| Palm Beach | 1967 (77% pre-1990) | 1984 (66%) | 1981 (72%) |
The median retail building in Miami-Dade was built in 1965. Not the oldest one — the middle one. Three-quarters of retail stock across all three counties went up before 1990.
That is why the retail allowance ranges above run higher than tenants expect them to. When a landlord delivers a 1965 box "as-is," what you are accepting is sixty-year-old plumbing stacks, an electrical panel sized for a tenant who did something else entirely, a restroom that will not pass a current accessibility review the moment you pull a permit, and a roof penetration schedule nobody has looked at since the last tenant's HVAC went in. None of that shows up in the rent quote. All of it shows up in your construction budget.
Industrial is the other end. Miami-Dade industrial has a median year built of 1985 and the smallest pre-1990 share of any category here, which is exactly why warehouse allowances are the thinnest on the table — there is genuinely less to fix, and most of what you spend goes into the office portion of the unit rather than the box.
Running a real one
Take a 3,000 square foot second-generation retail space in Broward, asking $38/SF triple net on a seven-year term. The landlord opens at $20/SF of allowance, which is $60,000, and calls it generous.
Against the table above, $20 is the bottom of the inline strip band. For a space in a county where the median retail building is a 1972 vintage, that is a landlord contribution to demolition and not much else. Measured the other way it is $60,000 against a first-year base rent of $114,000, so roughly half a year's rent — inside the ordinary range, but the low half of it.
Now put the amortisation question on it. If you negotiate to $45/SF instead, that is $135,000, and if the landlord amortises the extra $75,000 into the rent over seven years at 8% he is adding about $4.00/SF to your rate. Your $38 deal becomes a $42 deal. Whether that is worth doing depends entirely on what $75,000 costs you to borrow, which is the one input this calculator cannot know and you can.
The version of that trade I would actually push for on this deal: hold the rate, take the allowance up as far as it will go on landlord's dollar, and give the term back instead. Term is the cheapest currency a tenant has, and landlords price it more generously than tenants expect.
Getting the number up
Five things move an allowance, roughly in order of how much they move it:
Term
The single strongest lever. A landlord amortising his contribution wants years to recover it, and every year you add lowers his annual exposure. Going from five years to seven or from seven to ten will usually buy more allowance than any argument about the condition of the space.
Your credit
An allowance is an unsecured advance against your promise to stay. A tenant who can show two or three years of clean financials, or who will offer a modest security deposit structure instead of a personal guaranty, is cheaper for the landlord to fund and gets funded more.
Free rent traded for capital
Landlords guard rate and hand out free rent more readily, because free rent does not reset the number the building is valued on. If you are short on allowance and the landlord will not move, ask what he will do on abatement and fund the gap yourself with the money you did not spend on rent.
Who holds the contract
A landlord doing the work himself under a turnkey delivery carries the overrun risk and typically spends more than he would have given you in cash. On an older building where the surprises are behind the drywall, turnkey is frequently the better deal even though the headline allowance number looks smaller.
What happens to what you do not spend
Most work letters quietly say unused allowance reverts to the landlord. That clause is negotiable and almost nobody negotiates it. Ask for the balance as rent credit. It costs the landlord nothing at signing, which is why it is one of the easier things to win.
TI allowance questions
Is a tenant improvement allowance free money?
No. It is capital the landlord advances and recovers through the rent, usually with a return. A $250,000 allowance amortised over ten years at 8% adds roughly $3.64 per square foot per year on 5,000 square feet and repays about $364,000 over the term. Whether that is a good trade depends on your own cost of capital.
How much TI allowance should I ask for?
Enough to bring the space to a usable condition, argued from the building rather than from market averages. With 61.4% of tri-county office stock built before 1990 and a median completion year of 1984, much of what a tenant needs done is replacement of end-of-life building systems rather than cosmetic fit-out — which is a landlord cost dressed as a tenant request.
What can a TI allowance be spent on?
Whatever the work letter permits, and many restrict it to hard construction only. Architectural and engineering fees, permits, data cabling, signage, furniture and moving costs are commonly excluded and can absorb a large share of a real budget. Negotiate the broadest definition available and get exclusions listed explicitly.
What happens to allowance I do not use?
It depends entirely on the work letter. Common outcomes are that the balance reverts to the landlord, converts to a rent credit, or carries forward. Silence defaults to the landlord keeping it, so a rent credit is worth asking for while they still want your signature.
Do I repay the allowance if I leave early?
Often yes. Unamortised allowance is frequently recoverable on default or early termination, sometimes in addition to other remedies. Check how the balance is calculated and whether it stacks, because it can exceed the negotiated termination fee.
How much tenant improvement allowance should I get in South Florida?
It depends on asset class and on how much competition the landlord has. Negotiated outcomes here typically run $15-$40/SF for inline strip retail, $25-$85/SF for Class A office depending on the submarket's vacancy, $60-$120/SF for restaurant use and $10-$25/SF for warehouse. A useful cross-check is that an allowance between a quarter and one-and-a-half times your first year's base rent is ordinary.
Does the age of the building affect the TI allowance?
More than anything else. The median retail building in Miami-Dade was built in 1965 and roughly three-quarters of tri-county retail stock predates 1990, which means an 'as-is' delivery often includes plumbing, electrical capacity and accessibility work that a newer building would not need. That is why retail allowances run higher than tenants expect and warehouse allowances run lower.
Is it better to take a bigger allowance or a lower rent?
Whichever is cheaper than your own cost of capital. An amortised allowance is a loan at the landlord's rate, usually around 8%. If you can fund the build-out for less than that, take the lower rent. If you cannot fund it at all, the allowance is worth having even at a premium.
Tools: space calculator · lease cost · occupancy cost · TI work letter · all calculators · Justin Crow, South Florida tenant rep